THE question therefore is why has it become very easy for government officials to embezzle pension fund in such magnitude. The truth is that the pre 2004 pension reform pension administration in the public service lacked transparency and accountability. Transparency is the quality of being clear, honest and open.
As a principle, transparency implies that managers and trustees have a duty to act visibly, predictably and understandably. It means that there is clarity, accuracy, and lack of confusion in the processes and ultimate results of actions taken on behalf of the people by those to whom such responsibilities have been given.
It also connotes openness to scrutiny that reassures on the observance of due process. Sufficient information must be available so that other agencies and the general public can assess whether the relevant procedures are followed, consonant with the given mandate.
Accountability is the obligation of an individual or organisation to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner. It also includes the responsibility for money or other entrusted property.
Corruption is the opposite of accountability and transparency and manifests in varied negative behaviours identified by Nuhu Ribadu to include “fraud, embezzlement, conflict of interest, extortion and misuse of power, misappropriation of public resources for purely private use, disregard for accountability in the exercise of discretion when entrusted with power, and disregard for rule of law”.
In developed financial and capital markets all intermediaries such as banks, insurance companies and pension funds are well regulated. The role of the regulator is bringing in international best practices into pension administration. The regulator is backed by regulatory authority, which is the power that the legislator gives it to enforce statutes, to develop regulations that have the force of law, and to assist the public in ensuring that regulated entities comply with laws and regulations.
One of the reasons for embarking on pension reform in Nigeria in 2004 was that pension administration especially in the public sector had been largely weak, inefficient, less transparent and cumbersome. There was also lack of regulation.
Until the enactment of the Pension Reform Act 2004, with Section 14 of the Act establishing the National Pension Commission and Section 15 empowering the Commission to regulate, supervise and ensure the effective administration of pension matters in Nigeria, pension administration in the country was not regulated. Public servants administered pension the way and manner they deem fit with little or no accountability, which gave room for fraud.